Payments to providers to be based on global budgets and case-mix

In his reply to the Coalition on 25 May 2005, Health Ministry Director General Ismail Merican attached a five-page response to the seven questions raised by the Coalition on 4 May.

The following is a summarised translation of the text followed by a copy of the five-page document in Malay:

1. How much will a worker earning RM1,000 have to pay in monthly contributions?

Although mandatory contributions have been proposed, they will only be levied on those who can afford it. The government will finance the contributions of the poor, the elderly and the disabled. The services of consultants are being sought to determine the income threshold above which contributions will be mandatory so that the people will not be burdened. Thus, the quantum of contribution for a worker earning RM1,000 has not yet been finalised.

2. What will be the cut-off point (in monthly income) below which workers will be exempted from making contributions to the health fund?

See above

3. Will workers who are given full government subsidies be entitled to the same treatment package as those (earning higher salaries) who make full contributions to the health fund? Will they have equal access to treatment?

The essential health care packages will be the same irrespective of the rate/mode of contribution. The level of access will be the same. Those who can afford it can take up additional private health insurance that would entitle them to additional services such as accommodation in a higher-class ward.

4. Will those given full subsidies be entitled to go to private hospitals?

Yes.

5. Will this new financing scheme reduce the income disparities between doctors in the private sector and those in state-run hospitals? How? (If income disparities are not reduced - and the market for the private sector is broadened by this new scheme - more government doctors will quit and the general hospitals will be further weakened!)

The implementation of the mechanism will be carried out in stages. It is proposed that government hospitals and clinics be restructured to improve efficiency and quality. Through this restructuring, government doctors will enjoy better salaries and working conditions, and it is hoped that this will stem the brain drain to the private sector.

The concept of “full-paying patients” will be introduced as an incentive for doctors to remain in government service. The Private Health Care Facilities and Services Act 1998 will be enforced so that the construction of private hospitals will be controlled and not concentrated in certain areas.

6. Will the system of payments to doctors be based on the procedures and surgeries that they carry out?

Several health financing models have been studied, and we find that the "provider payment mechanism" is suitable. What you are suggesting in your question is the “fee-for-service” model, which is not encouraged because it leads to excessive and unnecessary procedures and higher costs.

Among the proposals put forward is for annual global budgets based on a hospital’s case-mix and on the local population (“capitation”) seeking treatment at clinics. This system is better than one based only on surgeries and procedures carried out by doctors.

7. What kind of safeguards will there be to ensure that the fund is not abused to procure certain services from private firms at prices that are detrimental to the people (and profitable for those select firms)?

The fund will be administered by the National Health Care Financing Authority under the Health Ministry. This Authority will function as a non-profit organisation and will not be privatised. Apart from its collection and payment functions, the Authority will also be involved in planning, research, evaluation and monitoring to ensure there is no abuse.

The Health Ministry will constantly monitor the Authority and, under the Ninth Malaysia Plan, the Ministry will set up a National Health Advisory Council. This Council will comprise members from both the public and private sectors and seek their feedback/views on various aspects including the health financing mechanism.

8. The Ministry is ready to discuss the health care financing mechanism with you, and you will be informed about this soon.

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